SSR Mining Inc (SSRM) 2009 Q3 法說會逐字稿

Good day, everyone, and welcome to the third quarter 2009 financial results and project update conference call. Today's conference is being recorded and now for opening remarks and introductions, it is my pleasure to turn the conference over to Silver Standard's President and CEO, Mr. Robert Quartermain. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen. Welcome to Silver Standard's third quarter conference call, reviewing our financial performance and updating our projects.

On the call with me this morning, we have George Paspalas, Senior Vice President of Operations, Joe Ovsenek, Senior Vice President - Corporate Development, Tom Yip, Vice President - Finance and Chief Financial Officer, [Christa Madel], Vice President, Corporate Secretary and General Counsel, Ken McNaughton, Vice President - Exploration, and Paul LaFontaine Director of Investor Relations.

Our financial statements, as well as our management discussion with project updates, have been filed on SEDAR and are available on our Website. We have a visual presentation to accompany our comments today and it can be found at the Web location referenced in our press release of yesterday.

We will be making forward-looking statements on the call today and I will advice you to refer to our forward-looking disclosure on this Webcast and on our disclosure on our Website.

Our focus in the third quarter was ramping up at the Pirquitas mill complex. The integration and optimization of the mill has continued such that we expect to achieve commercial production during this fourth quarter.

As envisaged in the feasibility study update, historical jig tails were used to be -- feed the plants allowing us to recover meaningful silver and concentrate. We have been disappointed by our production results to date due to more variability in grade and oxidation in the jig tails than anticipated.

This has resulted in the reduction of silver concentrate production which in turn is reducing our guidance and expected silver production to between 1 million and 1.5 million ounces for 2009.

Since our last estimate of capital cost to complete was announced in August, there has been additional capital expended to complete final mill work optimizations with our capital cost to complete now estimated at $239 million.

We know that shareholders are focused on our ability to deliver Pirquitas. We have achieved plant operational targets and are now focused on optimizing the silver and tin production levels. We are starting to process pit ore through the mill and we have moved away from the historical jig tailings as a feed source.

George Paspalas, our Senior Vice President of Operations, will describe Pirquitas in more detail in his presentation. First, Tom Yip, our Vice President - Finance and Chief Financial Officer, will speak to our third-quarter results. Tom.

Thanks, Bob. As we transition to producer status we have changed our functional reporting currency to US dollars, effective at the beginning of this year. For the P&L we have a net loss of $95,000 or $0.00 a share compared to net earnings of $11.9 million or $0.19 a share in the third quarter of 2008 which includes an after-tax gain of $18 million for a sale of a property.

This year's quarter's results include general and administrative expenses of $2.5 million, similar to other quarters as we have added senior staff earlier this year preparing to transition to a producer.

Stock-based compensation was $[1.2] million as we continued to amortize the Black-Scholes value of previously granted options. This charge is less than in prior quarters because we have less options still standing.

We had a foreign exchange gain of $2.9 million resulting from the impact of the strengthening of the Canadian dollar on our [net] Canadian monetary assets. And during the quarter we received interest and disposed of a portion of our marketable securities portfolio which totaled approximately $700,000.

In terms of cash flow we began the third quarter with $53 million. And during the quarter we had a net decrease of $10 million in our cash balance.

For finance activity we sold 3 million common shares [or] net proceeds after expenses of approximately $47 million. We [did] $5.7 million in operating activities primarily related to G&A cost of $2.5 million and another $3.2 million for working capital items.

For investing activities we spent $52 million advancing our projects. This included $8 million on exploration of which the majority was spent at Snowfield.

In addition, at Pirquitas we spent $19 million on construction and $18 million on pre-operating cost. To date, we have incurred $239 million compared to the previous estimate of $233 million for a permit to build the plant facilities. Included in the $239 million we spent a further $5 million for modifications to the plant to enhance silver recoveries resulting from our recent [Milledgeville] test work.

Related to the construction, we spent $6.7 million for refundable value (technical difficulties). We ended the quarter with $43 million in cash (inaudible). So in summary we are now optimizing our plans and anticipate reaching commercial production during the fourth quarter.

Back to you, Bob.

George Paspalas, our Senior Vice President of Operations, will walk you through the operational project progress at Pirquitas and also describe our engineering service at San Luis and Pitarrilla. George.

Thanks, Bob, and good morning everybody.

At Pirquitas the [F&P] continues to operate very well and we have reached a mature and reliable level of operation. But the operating and maintenance teams are combining well to realize excellent equipment availability and utilization.

The mining fleet, equipment availability average is in the mid-80 percentile on a year-to-date basis. Project to date, a total of [13.6] million tons have been moved from the pit as of the end of September including approximately 500,000 tons of [highly] oxidized and transitional ore.

Slide seven shows a recent shot of the pit viewed from the (inaudible) vein side looking north at phase 1 of the pit. Slide eight is a view up into the [Piracus] Gorge, which has been our principal waste storage area for the past six months. We gained some very high mining rates as this was established due to the very short haul from the pit. The haul coming out of the pit and heading down toward the concentrator is shown in the center foreground of the picture.

Slide nine shows a cross section with the actual pit topography shown on the right and the top of the sand well shaded vein system from which we are now mining ore.

Slide 10 shows our project to date pit tonnage ramp up. The peak mining rates achieved recently are attributed to those short waste haul from the Pirquitas dump. Mining rates now will average around the October rate as the ore haul has commenced in earnest which, as the graph shows, enables us to achieve 2010 production rates for the phase 1 pit.

The local employment strategy adopted at project inception has really paid dividends for us here in the pit operations. We have achieved a very high percentage rate of employed locals and have developed skill sets now that are enabling the locals to start to progress through the organizational structure.

Moving on to the process plant shown here on slide 11, process plant operational reliability improved significantly during July and August. Our two principal downtime issues were overnight freezing of the water supply source and electrical power distribution stability.

These were both solved in July and August, respectively, and the process plant has proven that it can operate at high levels of mechanical and electrical reliability. In fact, the short time it has taken the plant to reach the high levels of operating time we're experiencing has been a highlight of the third quarter for us. Operating times in excess of 90% are normal now and we achieved on average 93% for 22 continuous days in October prior to a scheduled shutdown to tie in the tin circuit.

The crushing and screening circuit shown here on slide 12 was commissioned late in the third quarter and is now operational. The gravity pre concentration stage has been precommissioned but will await open pit sulphide ore for final commissioning and operation in 2010.

Operation of the total circuit from the primary crusher through to the completed silver and tin processing lines enabled full load testing of the gas-fired(inaudible) generators and power station to be achieved and signed off.

Commissioning of the tin circuit -- slide 13 -- is in progress and initial tin production will occur during the fourth quarter. The biggest issue we face from a processing perspective is the variability in the metallurgical response of the stockpile historical jig tailings material.

Consistent progress was made during August and September in improving flotation circuit stability and final concentrate silver grade. However we have been unable to achieve consistent high concentrate silver grades as we have moved through -- as we move through the various jig tailing stockpiles.

As a result we have elected to switch the ore feed over to oxidized and transitional open pit ore early November in an effort to realize higher rates of silver production.

The issue with the lower concentrate grade is we have to limit the plant throughput to enable us to manage the volume of concentrate coming off of the flotation circuit. Whilst it is early days as we have just started processing the oxidized ore, the test work conducted on this material is encouraging with respect to making a high-value concentrate, and the initial appearance of the material looks promising.

We expect the open pit to be in full swing sulfide ore in the first quarter of 2010. And it is our intention to process oxide and transitional pit material through to the long-term sulfide ore supply from the open pit.

The jig tails were a limited feed source and served the purpose of enabling us to commission and run up the facility to steady-state continuous operation. Unfortunately, the variability in the metallurgy between individual stockpiles has impacted our ability to achieve desired silver production levels over this interim period.

We plan on providing updated production estimates for 2010 later in the year, as the current production schedule is finalized.

So that is it for Pirquitas.

The F&P continues to operate well. The process at Silver Line has proven its ability to operate reliably. Over the last three months we have seen improved plant operations, which augurs well for the future. The metallurgical response to the historical jig tailings has been extremely variable and required us to reduce our 2009 production guidance.

However, we have moved on into oxidized and transitioned pit ore now and expect the sulfide ore in the first quarter of 2010.

Moving on to the San Luis project, the draft feasibility for the San Luis project has been completed and is undergoing management review and we are negotiating long-term land access agreements for the project. Environmental data collection and environmental impact statement preparation has been ongoing throughout the year, with the environmental impact statement expected to be filed in the first half of 2010.

At Pitarrilla, we are advancing the Breccia Ridge underground prefeasibility study on two fronts.

Firstly, we are looking at optimizing the mining of the current reserve while, secondly, continuing to evaluate the potential for large bulk mining opportunities within the underground resource. It is anticipated that either of these scenarios alone or a combination of both will form the basis of the feasibility study planned for 2010.

We have commenced preliminary studies evaluating the merits of the near surface oxide deposits. And a lot of progress was made on seasonal dependent long lead time environmental baseline studies and samplings.

So that's it for me, Bob. Back to you.

I would now like to run you through our progress and other project activities.

Complementing our production focus, exploration is a value creation proposition for our shareholders and remains a key focus of ours as it enables us to enhance our project pipeline.

Late in the second quarter, we announced an updated resource for Diablillos. The resource was based on 15,000 meters of infield drilling at a spacing of 50 meters. We have converted 70% of the silver and gold resources to indicate it, with a slight reduction in overall resources from the previous inferred only resource.

Metallurgical test work demonstrated sulfide recoveries of 87% for gold and silver; and heap bleach tests gave recoveries of 65% for gold and 40% for silver, improving the economic viability of the property. We are continuing with engineering studies.

One of our most positive exploration successes in 2009 is our Snowfield project in northern British Columbia. Snowfield, along with the adjacent Mitchell Zone of Seabridge is turning into a world-class gold mineral system. We substantially increased our budget for the Snowfield project in 2009 and drilled in excess of 22,000 meters in the Snowfield zone with four drills operating. We had three drills exploring the Brucejack zone to the south where we completed 18,000 meters of drilling.

Our program is intended to upgrade a significant portion of inferred gold resources to measure and indicate resources in the Snowfield zone and add resources in the Brucejack area. Our recent Snowfield press releases speak to the continuity of mineralization of this zone and I refer you to those releases on our Website.

Drilling at Brucejack has been successful in two ways. First, it has outlined large zones of low-grade bulk tonnage gold mineralization such as the Bridge Zone where we indi-- conducted 522 meters [grading] .87 grams per ton gold in hole SU-19.

This hole ended in mineralization and is very similar in grade to the mineralization encountered in the Snowfield zone some 6 kilometers to the north.

In addition, we have had numerous drill intersects containing visible gold. The most significant of these was in hole SU-12 which encountered 16.9 kilograms of gold and 8.7 kilograms of silver over 1.5 meters.

Regionally, the area's host to the high-grade Eskay Creek and [Stimp] gold mines providing a high-grade gold/silver opportunity for our Brucejack zone. The Snowfield and Brucejack areas remain open for further testing, particularly the 6 kilometers separating these two zones.

With the Snowfield project and other gold projects, we have significant exposure to gold. And one of our objectives continues to be how best to capture the value of this gold exposure for the Company and for our shareholders.

In conclusion, achieving commercial production and transitioning to pit ore Pirquitas is our current corporate priority.

These are the formal remarks that we wish to make this morning and we will now be pleased to answer any questions which you may have.

(Operator Instructions). Eric Swergold with Gruber and McBaine.

Good morning. Thank you for taking my questions.

This quarter is a bit disappointing in that the Argentinian results or your production is coming down again and the concentrate doesn't appear to be economically feasible. And your cash balances are down quite a bit.

Given the increased budget for Snowfield, it seems like you've got a lot of projects on the plate at the same time and yet your cash balances are down. It would seem that you might have to come back to the market again in order to fund all of these things at the same time, especially since Argentina has not gotten up to cash flow positive within the timeframe envisioned at the last secondary offering.

Could you comment on that?

Well, with our working capital that we have at $27 million and other assets, we have sufficient funds to complete the commissioning of Pirquitas and expect in the first quarter we will ramp up production.

With respect to going to the market we will always look at those opportunities.

Chris Lichtenheldt with UBS.

First, I wanted to come back to the -- you said you had moved to oxide ore from the open pit and that I think you said the results are somewhat encouraging. I know on the press release it said that the recoveries there are about 30%. Is that what you expect recoveries on the open pit oxide ore to be going through this quarter?

Yes, the oxide is a gradation between oxide ore and transition ore. The encouraging aspects of the test work that we've done is, we seem to have the ability to produce very high concentrate grades from this material, albeit, particularly on the fully oxide [phase], at lower recovery. So we have stated that low recovery in there is the low point.

As we get into transitional ore, there is a strong belief that that will increase. But the good news on this material is it makes a high-value concentrate for us, particularly compared to the jig tails.

Right. Okay, I got you. And then in the first quarter of next year you said there will be transitioning to sulfide ore. Will that be sort of a quick transition or will you still be blending through that quarter? When will you be all sulfide?

We're even seeing some sulfide coming out of the pit now, which we're stockpiling. We just don't want to start on sulfide and then switch back to oxide.

We want to build up a good stockpile of sulfide and then go straight onto it and stay on it. And our schedule at the moment is indicating that that is in the first quarter.

Okay. Great. Just a couple more questions. Can you update us on where the strip ratio is right during this quarter? Are you sort of hitting that seven level?

Yes and in fact we have got some good news there. We've -- we are coming into phase 1 of what we are calling the San Miguel pit there. Strip ratio is running about 6 to 1 and, then, heading into next year that number is going to hold 6, go down to 5 and and you will find it will even start the trend down towards 3 later on.

Okay, great. Yes that is an improvement. And just on the 1 million to 1.5 million ounces that you expect to produce this year, how many of those will be sold in the fourth quarter do you anticipate? You have an estimate on that?

We expect to sell if we make the 1 million to 1.5 million about 1 million of that.

Okay, so you would sell and hopefully collect the cash on that in the fourth quarter?

Yes.

That's it for me now. Thanks a lot.

Haytham Hodaly with Salman Partners.

Good morning. Just a couple of questions. I guess maybe I will just follow up.

You talked a little bit about the 30% recoveries from the oxide. Is there anything you are seeing right now that would make you believe that when you hit the sulfides, you will not get to the high 70% recoveries?

No. The test work that has been done on that pit ore, Haytham, is pretty thorough. It's been reviewed by a lot of people. We have also done some follow-up work based on composites in the first three years of mining that verifies that.

So it may take us a little while to ramp into those numbers, but we are confident we will achieve those.

But it's fair to say that just based on the blend of oxide and sulfide in Q1 at least that the numbers, guidance for next year will go down a little bit anyway?

A little in the first quarter most likely but I'm optimistic about what we will get out of this oxide.

Sure. Okay. Could you give us an update, George, maybe just on the progress with the tin and the zinc circuits?

Sure. (inaudible) answer that question, but zinc is a good story for us down at Pirquitas. We have been encountering far more zinc at the property than was initially envisioned. That's a tough word for me to say, initially for it.

The principal reason for this is that the historical database is incomplete on zinc [oxide]. So our efforts now are going into optimizing the silver and tin circuits and once that's done, we will turn to zinc and determine the optimal plant size and configuration required to accommodate the additional zinc.

This zinc situation was recognized in the detailed engineering phase of the project. The current facility has been designed to facilitate and expand the zinc circuit. You know, we are going to get the silver bedded and the tin is coming up now and I would say in the first half of next year we will turn our focus on what future zinc looks like at Pirquitas.

Okay and when you provide an update, I guess for next year, you will give us an idea of what you are thinking in terms of zinc production longer-term, etc.?

Yes, that's correct.

Maybe just a question on the financial side. You spent about $239 million of the $233 million, I guess, original budget. How much additional CapEx is required -- not pre operating CapEx but actual CapEx? Is there anything left or are you pretty much finished with the construction costs there?

We -- excuse me. It's all in there now. We wrapped that up. Moving forward on the property, the property has been designed such that we are going to have ongoing sustaining capital in small amounts in terms of raising the tailings [point].

Yes, there's obviously some projects and some capitalized maintenance that will incur going forward, but most of the money is thrown into it now. And now we are going to try and get it back.

Okay and what is a reasonable sustained capital number, George, on an annual basis?

$3 million.

Sorry. I missed that.

Three.

$3 million, okay. Perfect. And then with regards to just maybe I'll go over to the income statement. What is your forecast for G&A in the fourth quarter?

We should be running about the same level as we've done in the last quarter.

And do you anticipate that could increase at all here as you ramp up or you pretty much got all the personnel etc. that you need?

I think we're pretty well there.

Okay. Perfect. Thank you, gentlemen.

Jorge Beristain with Deutsche Bank.

Just following up on how should we think about the evolution of the ramp-up now at Pirquitas? I think you've given pretty explicit guidance about 1 million ounces now in the fourth quarter. I can understand because of the oxide versus sulfide grade issue you're not quite ready to gain the 2009 -- sorry 2010 forecast at this point.

But given the delay that we have now seen running for about six months behind schedule, does it look realistic that you will be achieving full utilization in the first half of 2010?

Yes, it does. For one the [term delay] is behind us now. It's -- we are just going through these transient metallurgical issue on the jig tails. We've got the ore coming out of the pit at design rates. So there's nothing to prevent us from thinking that 2010 will be more of a typical full year of Pirquitas on a loss of mine average basis.

And in terms of the zinc and tin circuits should we be modeling any zinc and tin byproduct in the near term? Or is that something that is going to come phased in a few months or quarters after you're actually selling silver?

No. We are selling silver now by the way, but the tin -- we are ramping up the tin now. We anticipate to make a small amount of tin in the fourth quarter and that will ramp up through the first half let's say of next year.

So next year will be a sizable tin production rate and heading to loss of mine average estimates.

Zinc will require some engineering. And it is unlikely that we would see zinc produced at Pirquitas until maybe 2011 at the earliest.

Great. And lastly could you just again explain a little bit this 3 million share issuance that you did during the quarter? How was that sold and if you see any further need to do these kind of share sales?

The issuance which we did in August was a prospectus overnight market transaction. And I think as Tom pointed out we have between cash and working capital of the funds we need to complete our activities for this year and get us started through next year. So there isn't a contemplation at this time for anything further. But that was done like you say in August and it was an overnight market transaction.

[Brian Fox] with CIBC.

I just have a couple questions on the concentrate at Pirquitas. Besides the grade issues that you've had in terms of getting sort of a high-value concentrate, have you noticed any change in the penalty elements coming through there?

No. One of the -- the main thing is, it's full of iron and not much else. So penalty elements are being very good at the moment. The oxide material as a transitional material that we are going to process is actually heavily leached of most medals other than silver, which is a nice situation. So we don't anticipate any penalty issues moving through that period as well.

And then the sulfide coming out of the pit is a very good high-grade [con]. No issue on the penalty side.

So it's mostly just a matter of getting the grade up there then?

That's exactly right.

So how much in terms of concentrate tonnage are you expecting to get out to get your 1 million ounces for Q4 then?

That depends on the grade. We are shipping 2,000 tons of concentrate a month at the moment. If the grade continues to increase, that number will come down. So it's difficult to give you a number until we get a little bit of operating history on the con grade from the oxide.

Thanks a lot.

[Jack Green] with Mountain Capital Management.

Hello. Thank you. You mentioned in your press release that you have a feasibility under review. How long do you anticipate that that is going to be?

Hard to say. But probably the order of two months -- one to two months for a review incorporate the outcomes of those reviews. So before something is absolutely final on that you might be looking at a three-month period.

Because I'm assuming that this is in regard to the San Luis property. In their recent disclosure in Esperanza's release they say that there is a significant amount of work that needs to be done.

I mean how -- what -- so you are anticipating that it probably will be in about three months? And then you will be complete there? At most?

Yes. I mean our belief is that we've got a good feasibility study here and we are going through some reviews and some certain geotechnical follow-up work. But it's just part of the reviewing of a draft feasibility process that we're going through at the moment.

Okay. Perfect and the Pirquitas question have all been answered. Thank you, guys.

(Operator Instructions). Craig West with GMP Securities.

Maybe just one or two questions and sorry I missed the first part of the call, but if you've already answered these --. Just on mining at Pirquitas how are things looking, reconciliation between expected grades in the block model and what you're actually seeing?

It's early days on the tonnage. We mined about 500,000 tons of ore. The majority of that has been oxidized material and we've seen quite an overcall on this material to the model, both in terms of grade and tons. So it's early days.

The reconciliation is positive, but it's the oxide material, which is -- which was unexpected in the levels that we are getting. So it would be mis -- it wouldn't be appropriate to say that the model is overperforming at the moment. We are just getting a lot more oxide at a higher grade.

So that's maybe a question that would be better asked at the end of the first quarter then if you are going to be getting into the sulfides -- what? Early 2010?

Yes we are just starting to touch them now. So we probably need a good four to six months of full sulfide mining before we can give you a very defendable reconciliation update on the model.

Can you remind me what grades we were expecting there then, based on the mine plan for '10 and '11? For silver, zinc and tin?

We are looking at around 190 to 190 grams per ton of silver. The tin in the upper levels of the ore body is lower than the average. So we're probably seeing numbers coming through around 0.15, 0.18% tin.

Zinc is very high. Certainly 1 to 2%.

And the zinc starts high and goes low, right? Is that how it goes? I seem to remember they sort of crossed paths there at some point.

Early on the call, I don't know if you got my response to zinc but there's a lot more zinc there than what was initially thought and so zinc is going to remain a significant contributor down there in the long term.

Sounds good. That's all my questions. Thanks.

Eric Swergold.

I have a follow-up question just on the financing side going back to this again. Just looking at your press release, it appears that you burned through about $60 million in the quarter and finished the quarter with about $40 million in cash, which would indicate about two months of cash left.

Am I reading your financial statements incorrectly? What am I missing there?

Well, the high -- the high expenditures, it's just to finish up the construction now going forward what we have is just normal what we call normal operating expenses. And they are in the range of about $6 million a month. Taking the average what we incurred in the third quarter which is around $18 million.

Okay. And the $6 million per month, does that include your increased exploration budget for Snowfield?

No. Those monies have all been spent now. The Snowfield project is now over.

But you said you were increasing your expenditures for Snowfield, but now you're saying you're not?

No, what I said is that for the 2009 season we had increased our budget expenditures and so that season started in June and finished in October.

Okay and then I'm not sure I understand. On the balance sheet your report roughly $40 million in cash but then you stated earlier when you answered my question that you have roughly $27 million in cash. Does that mean that you burned $13 million since the end of the quarter?

The cash is the cash and what I was referring to was part of working capital of $27 million.

Okay. And so how -- what cash level are you comfortable running the company down to? I mean you obviously need a certain amount of working capital. You can't run down to a 0 cash balance. I guess you could increase your lines of credit assuming the banks are amenable to that at this point. But it is hard to get credit if you're not -- if you don't have cash flow to pledge against it.

Would you be pledging specific properties if you need to get more debt or what would you do to get credit?

Well no, I think what we referred to before was that we have sufficient working capital and any other assets to get through our commissioning and we expect production to ramp up in the first quarter. So it's just a matter of getting through the next quarter and getting to the high production rates.

Okay and then given that the production profile has gone from 8 to 5 to 1.5 and that the concentrate levels have been subpar, what is to give us confidence that there isn't another cut to come to either the production levels or the cost of getting quality minerals out of the ground?

I mean so far, it appears that this project has just not come together nearly as envisioned. And every quarter it's just another reduction in what the projection is.

What is to give us confidence that 2010 is going to be a change from this trend?

In 2010, Eric, we jump into the pit ore which we haven't processed yet and which is what the facility was designed for. The downgrading has come from the poor metallurgical response we got from the stockpile historical tailings which is like an interim feel and the materials have sort of run the plant up and if we had any start-up issues it wouldn't really matter if we wasted them and that sort of stuff. And perhaps our track record is that that's been realized. They haven't performed well, but we are off that material and we are heading into the pit now which is what the facility was designed for.

And if you have an exemption from this new tax that Argentina has come up with on resource companies? I think it's a 10% tax. Are you exempted from that or how --?

We have fiscal stability however we are not exempt -- exempted and we are reviewing our options on that tax. The tax itself is currently before the courts of Argentina.

What does fiscal stability mean in this case?

We have fiscal stability agreement from 1998 for the Pirquitas project. The government of Argentina brought in export duties on [Dorian] and concentrate in 2002. These projects with fiscal stability prior to 2002 were exempted from that tax. In late 2007 the government saw high metal prices and [lost] the profits of mining companies and decided to impose these export duties on companies with fiscal stability.

We were assured by the government that it would not apply to us because Pirquitas was -- had fiscal stability and had not been constructed. They've had a change of tune however. That tax is before the court by the other projects that have fiscal stability.

Because obviously there has been a huge change in government control over there since '98.

Government control, there's been a number of change in governments. I believe the export duty is more the government looking for extra revenues as they have with the [soya] produced in country and it just seemed to profit the mining industry.

Okay. Well hats off to you. The analyst communities continue to be very very positive on you guys and I guess perhaps they've got the opportunity to raise more capital for you at some point in the future. And so they remain positive. But I myself have been pretty disappointed and I hope that the difficulties you've encountered in Argentina aren't an indication of your ability to convert other exploratory properties into producing properties. Thanks very much.

(Operator Instructions). Trevor Turnbull with Scotia Capital.

I just -- actually a quick follow-on on the stability agreement. Can you give me a sense -- was there a --? Is it like a 10- or a 15-year agreement or does it go for the life of the mine? Is there any sort of expiry on that?

30-year agreement (technical difficulties) April 1998.

And then my real question was hopefully not addressed earlier because I missed the first part of the call.

But in terms of Snowfield and what you're doing up there, I realize you spent quite a bit of money. You've had some very good results on that. Can you give us a sense of kind of what the strategy is going forward with Snowfield? Maybe not in terms of expenditures specifically, but just a high-level strategic sense of what you want to do with that property and how you can start to get a bit more value for what is obviously a very large resource?

One of the reasons we wanted to do the drilling this year was to look at converting some of the inferred resources into [measure] and indicated as it appears that there is often a little more value given for those measured and indicated than with the inferred.

So with the infill drilling we think we have been able to achieve that. We of course are doing a resource calculation on that. And we expect to have either late this quarter, in the first quarter of next year, we will have updates both on the main Snowfield Zone and then the Brucejack area.

And I think because of the results we had at Brucejack, particularly the high grade, we want to be able to assess what that all means and then, from that, determine what is the best strategy going forward to realize the value for our shareholders. We are not sure that there is full recognition for that gold asset within the Company and so as you point out we need to think about that and that is certainly something we are focusing on.

And I can't give you a specific answer. We want to get the results of this year's program out. And then as a result of that then we can probably be maybe more definitive next year as to how best to capitalize on the Snowfield opportunity for our shareholders.

And, sorry, Bob, when did you say you expected the resource?

We expect them either later this quarter or at the start of first quarter next year.

Okay, great. Well, hang in there at Pirquitas. Obviously if it was easy they wouldn't call it mining and we know you are doing your best. So good luck with it, George.

Thanks a lot. Appreciate that.

Haytham Hodaly.

Just a couple of follow-up questions. Just with regards to maybe George you got a line for the zinc. Obviously? What are you doing with the zinc ore right now, George? (multiple speakers) The zinc (inaudible) ore, I guess?

Stockpiling it.

Okay, how much tonnage do you have on that so far?

This is the short answer. We've got about 60,000 tons of that material. Fortunately from a zinc point of view there's not a lot of zinc in the jig tail and there's virtually no zinc in the oxide material.

Just on the mining costs, obviously a little too early to talk about overall cost per ton. But what are you seeing in terms of cost per ton moved?

Yes, we are seeing some good stuff there actually. We -- that is, guidance given before on that was $2.00 per ton. On [waste] $2.25 on ore and we're in that ballpark. And those costs are reducing as the efficiencies come in from maturing the operation in the pit.

So that is a really good number to go forward on.

So somewhere between $2.00 and $2.25 you're saying?

Yes.

Okay, perfect, and maybe a question for financial guys. In terms of your lines of credit, working capital facilities, what do you have in place right now?

We don't have any specific in place right now. We are working on getting some lines in. Highly dependent on revenue generation.

Fair enough. Thank you very much. Appreciate it.

Jorge Beristain.

Sorry. Just, again, to clarify. Do you have any update on what you consider your unit cash cost either pre- or post-byproduct credits for fourth quarter and looking at 2010?

Given the response of the jig tails, et cetera, we don't really. I mean it's a bit early to tell. We can operate that facility very well but we haven't got the metallurgical response out to give us some concrete numbers.

Mr. Quartermain, we have no further questions, sir, so I will turn it back to you for closing or additional remarks.

Thank you, everyone. As you know, we've made the comment that we were disappointed as well with results we had to date, but we have the plant facility is working. And we are now moving into pit ore and we look forward to giving you more updated material on our next call when we speak with you next year.

Thank you very much and enjoy your day.

Thank you Mr. Quartermain. Again, ladies and gentlemen, that does conclude our conference for today. We thank you all for your participation.